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marpy

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  • Chevron: A Crude Awakening Looms [View article]
    Not sure what you mean by "But you have to admit there are very real similarities to the oil shock of 1986 and the current oil shock of today." My understanding is that at the time, the Saudis and opec had decided to defend price and that by the time they decided to throw in the towel, Saudi production had dropped from over 10 million barrels per day to about 3 million barrels. This time around, they have decided to defend market share. - A very different strategy.
    Also with respect to shale production, one would think that the high depletion rate of wells coupled with the need for continuous capital spending to drill new wells will mean that at current prices production from these fields will drop off rather quickly. A lot of the production in these fields was fueled by cheap debt which is now more expensive if available at all. The economics of producing from these fields has changed considerably and sure costs can come down but I am not so sure that they can come down enough to bridge the difference needed.
    You also have many companies cutting budgets and putting projects on hold. While this does not impact currant production much, it will slow down growth in future production.
    What all the above tells me is that although we may not have yet seen the bottom in oil prices, we should not be in a bear market for an extended period of time.

    JMO
    Jan 17, 2015. 09:07 AM | 1 Like Like |Link to Comment
  • Wall Street Breakfast: Swiss Stocks Extend Slide [View article]
    Not to say Cuba had much with Castro but the only thing Cuba had pre Castro was a lot of corruption and criminal activity. For most citizens it was a craphole before and during Castro. What the future will bring, we will see. JMO
    Jan 16, 2015. 09:29 AM | 4 Likes Like |Link to Comment
  • Falling Rig Count Could Cause Natural Gas Production Decline [View article]
    Yes this is coming as many oil/ liquids wells also produce considerable natural gas and companies with large dry natural gas positions should do quite well as a result in the slow down in oil/ liquids drilling. ECA is a large player in the Haynseville and seem to be doing quite well with a program of re fracking their old wells. They are also key players in a number of other natural gas plays and have recently moved into the Eagle Ford and Permian which should do well for them when oil does rebound. JMO Long ECA
    Jan 15, 2015. 02:33 PM | Likes Like |Link to Comment
  • Saudi Arabia: Cutting Off The Hand To Save A Finger [View article]
    By protecting market share, what the Saudis are doing amounts to short term pain for long term gain. The last time they tried to defend price over market share, their production dropped from over 10 million barrels to 3 million barrels as other just kept increasing production as the price stayed up and Saudi production dropped. You can be sure that once the current bear market in oil comes to an end, that most producers will be a little gun shy and be constantly looking over their shoulder as the Saudis are showing that they are quit serious and will go to extremes to protect their market share. Even those producers that may want to start running full tilt when the markets turn positive, are going to find that the banks have become a lot more cautious with their money. The Saudis want to take out high cost production by others and keep it out for as long as possible so that they can get maximum average dollar for as much of their low cost production.
    Note that the big Iron Ore miners are following the same strategy and I suspect that the strategy is very sound. JMO
    Jan 15, 2015. 02:17 PM | 6 Likes Like |Link to Comment
  • Wall Street Breakfast: Oil Majors Cut More Jobs As Crude Slides [View article]
    The mistake was made when they pegged it in the first place.
    Jan 15, 2015. 10:46 AM | 3 Likes Like |Link to Comment
  • Oil Rig Efficiency Will Fuel A Deeper And Longer Price Decline Than Many Expect [View article]
    A lot of the nat gas production can from oil or liquids focused drilling that tends to produce both oil and gas and as the oil and liquids focused rig count declines, you will IMO also see an impact on nat gas.
    Also a lot of the new oil wells are shale wells that have high initial production rates that taper of fairly quickly and this means that new well rates are not the indicator of on going production that they used to be.
    To maintain production from shale fields takes a lot more continual drilling than from conventional fields.
    Jan 14, 2015. 12:17 PM | 2 Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    I doubt many are fine. Those that survive will be stronger - that is true for any industry going through tough times. The problem with shale is that many will not survive. As for shale being resilient, Its not. The depletion rates, makes maintaining production very capital intensive so that players in the sweat spots will be OK but those with lower quality holdings are in trouble. Also note that Bakkan oil is getting $15 - $20 less than WTI due to bottle necks and transportation costs. Not a pretty picture at all.
    Jan 14, 2015. 08:43 AM | 5 Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Those that survive will be stronger - that is true for any industry going through tough times. The problem with shale is that many will not survive. As for shale being resilient, Its not. The depletion rates, makes maintaining production very capital intensive so that players in the sweat spots will be OK but those with lower quality holdings are in trouble. Also note that Bakkan oil is getting $15 - $20 less than WTI due to bottle necks and transportation costs. Not a pretty picture at all.
    Jan 14, 2015. 08:41 AM | 1 Like Like |Link to Comment
  • Canada's oil sands operators to keep production high, seeing long-term value [View news story]
    Note that for Cenovus (CVE) operating costs are probably closer to $20/ barrel. when times get tough, everything gets cut leading to lower operating costs. Also CVE produces more natural gas than it uses in its oil sands operations. This gives it a hedge against rising natural gas prices in the future.
    Jan 13, 2015. 01:51 PM | 2 Likes Like |Link to Comment
  • Bank Of Montreal: Solid Dividend Play At A Discount [View article]
    They did not stop production in the past when oil tanked and so I do not see them stopping production this time either. Oil is also getting to a price that is going to be very stimulative to consumption and has a big impact on drilling and shale producers ability to maintain output. This means that it will not stay low for long. Yes their will be some pain but the sky is not falling. JMO
    Jan 13, 2015. 09:15 AM | 1 Like Like |Link to Comment
  • Bank Of Montreal: Solid Dividend Play At A Discount [View article]
    Many Canadian oil sands plants can produce at $30/ barrel or less. Also note that some of these plants survived $10 oil. So while low oil prices will affect expansion of oil development and cause the economy in general to slow down as everyone takes a cautious approach in Western Canada, it will not have a big impact on oil sands plants already in operation. Also, one must note that the Canadian banks have never cut their dividends even during the great depression of the 1930's. In the case of BMO, they also have a sizable foot print in the USA which should be a big help as the US economy grows. The current situation may slow down growth a little for the Canadian banks, but the mid to long term should be very positive for them. JMO- Long BMO
    Jan 13, 2015. 09:10 AM | 2 Likes Like |Link to Comment
  • Futures higher as oil's crash continues [View news story]
    Make no mistake about it - OPEC is still in control when it comes to the price of oil. The key members decided that the price had to go down and it went down. When they decide that they have accomplished their goals and the price needs to go up, it will go up.
    Most oil (70%) is used for transportation and this is a market that alternatives have not had much impact in. The other 30% is used mostly for manufactured products - again hard to replace. Oil will be in high demand for a long time to come. JMO
    Jan 13, 2015. 08:57 AM | 1 Like Like |Link to Comment
  • Everything Has Changed: Oil, Saudi Arabia, And The End Of OPEC [View article]
    Make no mistake about it - OPEC is still in control when it comes to the price of oil. The key members decided that the price had to go down and it went down. When they decide that they have accomplished their goals and the price needs to go up, it will go up.
    As for global warming, most of the problems here are a result of burning coal. It is much easier to replace coal in power plant applications than it is to replace oil in most of its uses.
    Oil will be in high demand for a long time to come. JMO
    Jan 13, 2015. 08:33 AM | 35 Likes Like |Link to Comment
  • A Crude Oil Bottom: Where To Look For Clues [View article]
    No - their is a huge amount of storage available - they have not even really started storing it yet.
    Jan 12, 2015. 03:53 PM | Likes Like |Link to Comment
  • A Crude Oil Bottom: Where To Look For Clues [View article]
    Its an engineered event more than anything real which means that when it turns, it will do so on a dime!
    Jan 12, 2015. 03:51 PM | 12 Likes Like |Link to Comment
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